gmhTODAY 13 gmhToday March April 2017 - Page 68

M A Primer on Mortgage Insurance any buyers in Santa Clara and surrounding counties have purchased their homes with loans that required Mortgage Insurance. Mortgage Insurance (MI) is a requirement on some programs when you buy a home with less than 20% down. MI is also required when you buy a home with a government-backed program like an FHA loan or a USDA loan. The most common questions about MI (sometimes called Private Mortgage Insurance or PMI) are these: how do I avoid paying it, and how do we remove it once we have it? MI avoidance is not always easy especially since most of the time it requires a 20% down payment. Here are some ways to avoid paying MI: 1) First and Second mortgage combos: Using a combination of a first mortgage and a second mortgage, you can eliminate the MI requirement and still put as little as 10% down. This creates value as every dol- lar of your payment is now eligible for the interest deduction at year end. 2) Higher rate: some programs exist that will allow you to do as little as 5% or 10% down and have no MI, but you will pay for it in a higher interest rate. When you look at the payment side by side many times the higher rate does not result in a higher payment as MI is out of the picture, and again every dollar of the payment is now a benefit on the tax return. By Jayson Stebbins Mortgage Professional Jayson Stebbins is a 23 year veteran of the Mortgage Banking industry and an Accredited Mortgage Professional through the Mortgage Bankers Association. He grew up in Morgan Hill and currently lives in Gilroy. He is the local Branch Manager of Guild Mortgage, a 56 year old mortgage banking firm. His office is in Morgan Hill and serves all of Santa Clara, San Benito, and Monterey counties. You can reach Jayson and his Team at 408-782-8800 or at jstebbins@guildmortgage.net 3) Buying out the MI: it is possible to do a one-time payment and pay the MI all at once. Usually the cancelled monthly MI payment will result in a manageable recapture over time, and could justify the upfront expense. As for the removal of MI, it is important to note that some programs do not allow it at all. In the past decade the rules of MI removal have changed many times, so the removal of MI depends on the age and type of your mortgage. Here is a quick primer: FHA loan: depending on when you closed on your FHA loan, the only way to remove the MI is through a refinance into a new loan. Older FHA loans have a formula that allows removal without a refinance. Contact your lender for more information on how they handle the removal. Conventional F22FRFB2FRV6W7BFFԒ&Vf&Vf6R2v2FvWfW"`RfR'VBW"WVG6FF#PR6WFFFR&VfbԒ'W VFW"FW&WV&RFWVFV@&6"FW"F7VVFFF6ǐvFFR&Vf6V6FRF667W&W2ԒW"&v6vRf"FWF2FW"2ƖRU4DFBrf Ԓ&Vf6&Vf6RvVB&RFRǐvF&VfRFRFǒԒƖ&ƗGvV7G&FVvr&WBԒB2v0vBFBW"rFW&6'BЧFW&66frBFRvW"bW6WFW2Ԓ2VfF&R'WBvF6P7&VFfRF涖rBrR6PFW"6WF2v&f"W"f֖ǒद67FV&&22Ɩ6V6VB'FvvRvVB4f"wVB'FvvR6233Cc3Ɩ6V6VB'*4F667W&SƖ6V6VB'FRFW'FVBb'W6W72fW'6vBVFW"FR6Ɩf&&W6FVF'FvvRVFr7B*26VVRB3#sC'&6VVRB3CFP7Fw2F2VFF&F( BV6W76&ǒ&W&W6VBFR6F27G&FVvW2"2bwVB'FvvP6"G2ffƖFW2*F2f&F2BwV&FVVBF&R67W&FRB6B&R67G'VVB0wV&FVRb&f*2&R7V&V7BFVFW'w&FW"&fB&R7V&V7BF6vPvFWBF6R* *WVW6rVFW"wVB'FvvR6&W6VG0V&rR6'WR6Ɩ6fWg&VR6V֖"6v66rf6F2f&RFP6GW&F&6#WF#rBFR&v6VGB7VGW&6VFW G&R&( "FV6v&R&fFVBBFW&R2g&VR&ffRB␥%5eW&wVF'FvvRWB"6Cs"ッct$( "$t( "4%D$4$#pvևFF6